Think of it, the Earth itself is always spinning at about 1660 Km/Hour near the equator. That is a lot of energy that could be tapped.
My idea has some pre-requisite's however:
Space Elevators, for getting the construction material to orbit cheaply.
Microwave energy transmission/Laser energy
Superconduction wire, a single wire thousands of kilometers long.
The concept is simple, and has even been discused in various forms. My variant has a few important differences.
The 'Sky-Wire' is simply a loop of superconducting wire run around the earth in orbit, where the maximum gain from the earths magnetic field can be attained.
(probably far from the normal satelite orbits, and probably further out than geosynchronus)
The systems itself works by a simple magnetic dynamo effect.
The ring of wire is simply rotated counter earth-orbit spin wise. As it passes thru the magnetic field lines of the earth it develops a huge charge, which is transfered by Microwave transmission points along the wire to Space-Elevator recieving stations.
There are multiple recieving stations (space elevators), along the earths equator as the Sky-wire rotates the transmission points aim at the next reciever in the line-of-sight.
There are several problems I will attempt to address as well.
The sky-wire will incurr drag from particles coliding into it, and as it rotates against the earths magnetic field. The solution to this is simple, feed power INTO the sky-wire to speed up its rotation again. (turning into a giant motor)
Also Sky-wire may just overload and vaporise itself. (uhm, bigger thicker cables then... although a perfect super-conductor could absorb HUGE amounts of current.)
But beyond those problems, this system should work. It's certanly NOT violating any of the laws of thermodynamics, as technically its converting the Earth's orbital kenetic energy itself into current by utilizing the magnetic field of the earth... so it would slow earths orbit by some small ammount. (not likely to be noticed in millions of years)
This I would think is as close to free power as possible, without some really exotic effects like vaccum energy or black holes.